How to buy stocks?
Buying stocks isn’t as complicated as it seems, but you’ll need to do some research — and learn the lingo — before you make your first investment.
- Select an online stockbroker
The easiest way to buy stocks is through an online stockbroker. After opening and funding your account, you can buy stocks through the broker’s website in a matter of minutes. Other options include using a full-service stockbroker, but trust me you can this yourself
Opening an online brokerage account is as easy as setting up a bank account: You complete an account application, provide proof of identification and choose to fund the account by transferring funds electronically.
- Research the stocks you want to buy
Once you’ve set up and funded your brokerage account, it’s time to dive into the business of picking stocks. A good place to start is by researching companies you already know from your experiences as a consumer.
Keep the objective simple: You’re looking for companies of which you want to become a part owner.
Warren Buffett famously said, “Buy into a company because you want to own it, not because you want the stock to go up.” He’s done pretty well for himself by following that rule.
Once you’ve identified these companies, it’s time to do a little research. Start with the company’s annual report — specifically management’s annual letter to shareholders. The letter will give you a general narrative of what’s happening with the business and provide context for the numbers in the report.
After that, most of the information and analytical tools that you need to evaluate the business will be available on your broker’s website, such as SEC filings, conference call transcripts, quarterly earnings updates and recent news. Most online brokers also provide tutorials on how to use their tools and even basic seminars on how to pick stocks.
- Decide how many shares to buy
You should feel absolutely no pressure to buy a certain number of shares or fill your entire portfolio with a stock all at once. Consider starting small — really small — by purchasing just a single share to get a feel for what it’s like to own individual stocks and whether you have the fortitude to ride through the rough patches with minimal sleep loss. You can add to your position over time as you master the shareholder swagger.
- Optimize your stock portfolio
We hope your first stock purchase marks the beginning of a lifelong journey of successful investing. But if things turn difficult, remember that every investor — even Warren Buffett — goes through rough patches. The key to coming out ahead in the long term is to keep your perspective and concentrate on the things that you can control. Market gyrations aren’t among them. But there are a few things in your control.
Once you’re familiar with the stock purchasing process, take the time to dig into other areas of the investment world.
If you use EasyEquities as your broker, please visit my Twitter bio (@soulfairy3) for an EasyEquities demo.
I will be producing as much content as possible during 2022 and going forward on my YouTube channel (Soul Financial) specifically on how to do stock research and answering investor questions. Feel free to DM me your questions on Twitter or fill in the contact card on the website.